Gov. Christine Gregoire tonight signed the 1 percent property tax cap passed in the special session. She also signed the second bill passed by the Legislature, the property tax deferral program for middle-income families. She said that second bill was part of what she needed to do to secure enough votes to reinstate I-747.

Gregoire said that she didn't think the session had anything to do with Tim Eyman, sponsor of the original initiative. She was not happy with Eyman's claims that she and the Legislature had not done enough.

Gregoire: And my message to him is if he'd like to participate in the legislative process, run for office.

PoP: But why? It seems like he's doing pretty well without having to be governor or run for the Legislature. He passes an initiative, the court throws it out as unconstitutional and the Legislature rushes to put it into law. They did it with 695, too.

Gregoire: I actually don't think he's doing pretty well. He needs to get some help in writing initiatives. We're spending how much money and how much time in court proceedings because the initiatives are not written as they should be? That's what the legislative process is all about — to allow full and complete vetting and amendments and opportunities to do the sorts of things that can clean up a bill and give it a much greater chance of success through the court process.

So I don't know if you can call that success, to be honest with you. And the fact of the matter is, this has nothing to do with Tim Eyman as far as I'm concerned. I think the voters said very clearly what they wanted. And he may have written something. But the fact of the matter is my motivation is what the voters had to say. And the voters said they're fearful about whether they're going to be able to keep their homes.

It's been implemented now for five years or more. It is, in fact, the way we've been doing business. So I don't think this is a rush to judgment by the Legislature. I think it is exactly what the voters want to have done.

PoP: But they only got to have that say and say they want it done because Tim Eyman put it on the ballot. The Legislature has not passed a property tax cap.

Gregoire: You know, I can't say that they wouldn't have, though. They did something today that he hasn't suggested.

PoP: The deferral you're talking about.

Gregoire: Yeah.

Before the Senate takes up the 1 percent property tax cap members are debating a second bill that would create a property tax deferral program for mid-level income homeowners. The bill, SB 6178, comes at the request of Gov. Christine Gregoire and is sponsored by Sen. Claudia Kauffman, D-Kent.

Kauffman says the bill would help those who need it most who are in "real danger of losing their homes." The bill would allow people to defer property tax payments, but they'd have to pay back taxes, with interest, if the property is sold or the owner dies. The deferral would be available to households making up to $57,000-a-year and allow them to defer half their tax payments.

Sen. Joe Zarelli, R-Ridgefield, said the bill would push people further into debt because of interest charges that would accrue. Republicans have been describing the bill today as a form of predatory lending that would trap homeowners with large debt owed to the government.

"That's really what this is, payday lending by the state of Washington," Sen. Mark Schoesler, R-Ritzville, said.

The bill passed 27-21

All Republicans in the Senate voted no, as did four Democrats: Tim Sheldon, Brian Hatfield, Steve Hobbs and Jim Kastama.

The Senate is now, at 4:20 p.m., taking up the 1 percent cap bill.

Republican Don Benton also tried to amend the bill. He wanted to prohibit use of unused tax capacity that local taxing districts may have saved up.

"The underlying bill restores half the people's will," Benton said. "My amendment restores the other half."

Democrats challenged the amendment, just as happened in the House, saying that the amendment was outside the scope of the bill.

Lt. Gov. Brad Owen hasn't ruled yet. The Senate is standing at ease.

The Senate went back in about 5:30. Benton's amendment was ruled out of scope and tabled. Senators are now debating the bill and will vote soon.

Sen. Jeanne Kohl-Welles, D-Seattle, spoke against the bill and said Initiative 747 "should never have been passed by the voters in the first place." She said it has done more harm than good because local services have been starved of funding.

Republicans in the Senate are being more upbeat about the bill than most House Republicans were. Benton said the cap was a "step in the right direction and provides certainty" about increases in property tax rates. And he said how glad he was that the governor called the special session.

Sen. Mike Carrell, R-Lakewood, began his floor speech this way: "I am very happy tonight to be voting in favor of Initiative 747." He said it was a "great move" and that his constituents will be happy to have tax increases restricted even a little.

The bill passed 39-9. Voting no were Democrats Darlene Fairley, Ken Jacobsen, Adam Kline, Kohl-Welles, Joe McDermott, Ed Murray, Craig Pridemore, Harriet Spanel and Brian Weintstein.

Zarelli just told reporters he was happy with the Legislature's work today.

"The point is, where in history has a Legislature come into special session for the purpose of cutting taxes. Has that ever happened?"

The staff of the state Public Disclosure Commission will recommend next week that the commission dismiss a complaint alleging Republican gubernatorial candidate Dino Rossi used his non-profit foundation, Forward Washington, as a front for his 2008 campaign.

A staff report says:

Based upon the information gathered during the course of the investigation, as evaluated against statutory provisions and case law, PDC staff believes insufficient evidence exists to support a determination that Dino Rossi was a candidate for governor for the 2008 election prior to accepting his first campaign contribution on October 12, 2007.

Additionally, PDC staff believes that insufficient evidence exists to support a
determination that Forward Washington Foundation acted as a political committee.

State Democratic Party officials filed the complaint in June with the PDC, which enforces the state's campaign finance rules. The staff has been investigating the complaint since then.

Rossi has said he formed Forward Washington last year to offer solutions to the state's most pressing problems. As the foundation's president, he was paid $75,000 a year and traveled around the state speaking and raising money on behalf of the nonprofit.

He stepped down from the foundation in September, and publicly announced his plans to run for governor on Oct. 25.

Democrats said that since Rossi filed papers with the PDC for a 2008 campaign in 2005 — while he was engaged in a legal battle over the November 2004 election — he was a declared candidate and should not be able to take donations for Forward Washington that weren't reported as campaign contributions.

But the PDC staff says:

Mr. Rossi stated that the reports filed with the PDC as being for the 2008 election cycle did not pertain to any campaign for office. He stated that he submitted these reports only on the advice of PDC staff in order to raise funds for expenses related to the election challenge following the 2004 gubernatorial election. PDC staff found no evidence that Mr. Rossi mischaracterized the advice the PDC gave him, or that the expenses disclosed on reports filed subsequent to the 2004 election supported a 2008 campaign effort.

In fact, a thorough PDC investigation "did not find any documents or witnesses to support a conclusion that Mr. Rossi was intending to run for governor in 2008. All his public statements as well as those private ones obtained by PDC staff remain consistent that he had not made up his mind to enter the race for governor" before leaving the foundation post.

Rossi's campaign just issued this statement:

"I'm very happy that after a long investigation the recommendation from the PDC staff is that all charges be dropped. From the very beginning of the Forward Washington Foundation, we bent over backwards to make sure we were complying with all public disclosure requirements.

"This was obviously a desperate attempt by Christine Gregoire's agents to smear me, and it didn't work."

MORE: The state Democratic Party issued this statement from its attorney, Kevin Hamilton:
Democratic Party attorney Kevin Hamilton issued the following statement:

"This decision is seriously wrong-headed. The PDC staff and Republican Dino Rossi have created a huge loophole in the law that allows unregulated campaign activity. Though dishonest about it, Rossi has obviously been campaigning all year, while keeping his financial backers secret.

"Even if the PDC won't force Republican Dino Rossi to come clean, if he believed in transparency and openness he would voluntarily disclose who's been bankrolling him all year. The voters of Washington have a right to know which special interests are funding Republican Dino Rossi's political activities, even if he's skated through a giant loophole in the law.

"We're obviously very disappointed and will be evaluating our legal options."

MORE: Rossi spoke to Ralph Thomas, who sent me this:

Rossi said he thinks Gregoire should have to answer for all the "vile things" party leaders have been saying about him.

"I want her to retract them. I want her to apologize for that because it came from her people," Rossi said.

UPDATE: After the special session today, Gregoire took a few question from the press. Ralph Thomas asked her about the staff recommendation form the PDC.

Click here to hear his question and Gregoire's answer.

A theme in the run-up to today's special session has been the Democratic left's unhappiness with the Democratic governor and legislative leaders for embracing a Tim Eyman-crafted tax cap. At least it's been a theme here, so House Speaker Frank Chopp said he wasn't surprised when I asked him about it at a press conference this morning. He said he'd would vote proudly for the tax cap. And he is prepared to answer criticism from the progressive wing of his party.

"Now if you want a long list of all the progressive things we've done in the Legislature with our strong majorities and a great governor, I'd be more than happy to give it to you. I actually typed it. It's over 50 things that are very progressive, very positive for public schools, for health care — particularly for children — job development, for higher education, for transportation. I can go on and on."

He said later that he compiled the list himself. Unfortunately it's on his home computer and he didn't have a copy here today. This is not to say that Chopp has been inundated with complaints from his liberal friends. He said that as of a few days ago he had heard from all of three constituents. And he represents the 43rd District, one of the most liberal in the state.

The left is trying some new ways to be heard, though. By this morning legislative leaders were to be presented with a petition signed by more than 2,000 people asking them to reject Gregoire's plea to approve the 1 percent cap. Fuse, a political group in Seattle, wanted the governor and the Legislature to take a broader look at property tax reform.

In a plea to supporters to sign the online petition, Fuse's Chris McCullough wrote:

Please sign our petition today — we have to send the Legislature a powerful message demanding real property tax reform in Washington State, not a Tim Eyman stunt.

...

There are other potential solutions as well, but the Legislature is focused on Tim Eyman's approach, and won't seriously consider anything else without a powerful message from their constituents.

I wrote a little about Fuse when they first started last summer.

Speaking out against plans by Gregoire, Chopp and other leading Democrats is one of Fuse's early attempts to exercise what muscle it may have. The group hopes to both push Democratic lawmakers to "uphold progressive values" as well as to add more Democrats in all levels of government in the state.

Fuse's executive director, Aaron Ostrom, told me the other day that in general he thinks Gregoire has a pretty strong record. But tax reform is important to the group and opposing the governor and Democratic leaders now, he said, "is just one of those things we couldn't duck."

"This is just a lost opportunity to make the tax system more progressive and more fair," he said. "We are going to be an honest voice for progressive issues and we have to play it straight."

And Fuse sees Eyman as a bad guy.

This doesn't mean that a lawmaker who votes today for the limit won't get Fuse's support. And it certainly doesn't mean the governor won't. But Fuse hopes to train and deploy volunteers for the campaigns of the group's top-rated candidates. Others could still get votes of Fuse members, but not their labors.

Ostrom said:

"It's one thing to vote for the lesser of two evils, but working for the lesser of two evils is a totally different thing."

That's sort of the point David Goldstein is making today, too. He does so in his inimitable style:

Clearly the governor has no qualms about screwing her party's progressive base, a political miscalculation mired in a profound lack of understanding of what it is, exactly, the base actually does. (Hint: we don't just vote.) But our local representatives, who are, theoretically, more in touch with their constituents... they should know better. I'd wager there isn't a legislative district Democratic organization in Seattle that would endorse reinstating I-747, and yet I'd be surprised if a majority of the Seattle delegation didn't vote to approve the governor's plan. I'll be counting. And I won't be the only one.

Oh, it's not like most of us progressive activists would ever abandon the party, or refuse to cordially work with representatives who cross us, it's just that I want to make it absolutely clear that those who accuse bloggers like me of being "tools of the Democratic Party" have it exactly backwards: the Democratic Party is our tool, and we intend to use it to enact our agenda. And that's how it should be.

I am one of those who thinks some bloggers are party tools. And I think this is a rare occasion where Goldstein and some other liberal writers are nearly as hard on one of their own as they are about the opposition. I can't think of many times where I've read such a clear condemnation of party rulers.

And that takes me back to something I wrote earlier today. I think the special session is a win for Republicans, even if they didn't claim it. There are at least some Democrats ticked off by the special session. They won't vote for Dino Rossi. But for now at least they'll find something other than the governor's race, or boosting Democratic majorities in the Legislature.

Here's a link that will get you to the roll call for the House vote on the 1 percent tax cap. The eight no votes were Marilou Mary Lou Dickerson, Jamie Pedersen, new legislator Sharon Nelson, Eric Pettigrew, Sharon Tomiko Santos, and Helen Sommers, all of Seattle; and Sam Hunt of Olympia and Geoff Simpson of Covington.

The House is in session to consider the 1 percent cap limit. Speaker pro-tem John Lovick ruled out consideration of a Republican amendment that would have expanded the bill to also include "banked capacity." Lovick says the bill is short and simple and it would remain that way.

Rep. Christopher Hurst is the sponsor of the bill. He's up urging members to vote yes, saying that his constituents worry about losing their homes, and echoing Gov. Chris Gregoire, in saying people see home ownership as the foundation of the American dream.

"This bill helps protect that dream and i think that's why we're here today," Hurst said. He said things like banked capacity are "collateral issues" and shouldn't be part of today's debate. He said:

"This bill makes things exactly the way they were prior to the Supreme Court's decision. This will give the citizens exactly what they voted for in 2001. It does nothing more and it does nothing less. ... It would be disrespectful to the voers to add or subtaract to a decison they have already made."

Republican Rep. Ed Orcutt is saying that he wishes the Legislature would go further today that simply reinstating 747. "Even under that 1 percent cap, voters have been concerned about how much their proeprty taxes are going up," he said.

But he said he was glad that at least the 1 percent limit would be saved.

"I think the Supreme Court was a little bit off base, to say the least. ... I'm one of the voters who voted for Intiative 747. I knew what I was doing and I believe that most of the voters knew what they were doing when they voted for Initiative 747."

A half dozen or so members have spoken, so far all in favor of the bill.

Geoff Simpson, who I just wrote about in the previous post, is the first opposition voice heard.

"I feel kind of like the Lone Ranger here. I'm rising in opposition, although I agree the Supreme Court did make a mistake. The people knew what they were doing. They were getting a bargain. I like bargains."

But he says voters weren't given a choice of how best to restrain tax growth. And 747, he said, is bad public policy.

Rep. John Ahern, R-Spokane, said the Supreme Court was wrong to say voters didn't know what they were doing when they voted for 747.

"In other words, it was an insult to the voters, their intelligence, kind of a slap in the face. And it hit me too because I voted definitely for that."

Rep. Mike Armstrong, R-Wenatchee, said what I thought was probably the best approach for Republicans: Declare victory over the ruling Democrats.

"Our side of the aisle is very, very pleased that the governor heard our cry for this special session. We are ecstatic to be here."

He added that the 1 percent cap is just a "finger into the hole in the dike" and the Legislature needs to come back.

The special session is a victory for Republicans, those in the Legislature and the one running for governor, Dino Rossi. They were out front calling for the emergency session and the governor and Democratic lawmakers followed.

My sense listening to the debate, though, is that declaration has been overshadowed by Republican criticism of the Legislature not doing more today. Maybe House Republicans are just modest. We'll see what happens later in the Senate.

The bill passed 86-8. One lone celebrant clapped.

I think the dilemma for many Democratic lawmakers today was summed up in this question to legislative leaders, asked by public radio's Austin Jenkins:

"Do you see the 1 percent cap as good and sensible public policy, or do you see that you're here today to enact the will of the voter?"

Jenkins asked the question at a crowded press conference with Democratic leaders of both chambers. It wasn't meant to be a gotcha. He's an earnest young reporter. But around the room there were nervous chuckles, even from House Speaker Frank Chopp as he thought for a moment before answering:

"I believe very strongly that the voters knew what they were voting on with the 1 percent cap. That's what we're here to do, reinstate the 1 percent cap. I think generally there are people out there in the public who would like us to essentially be able to approve additional property tax increases when it's for targeted things. I mean, if you look at the history around the state, there's been numerous proposals by local governments to raise taxes which have passed the voters.

"So, I think it's a combination of efforts there."

Senate Majority Leader Lisa Brown, D-Spokane, said her members have differing views of how best to control tax growth, and she added:

"Obviously we also have our differences of opinion about Tim Eyman."

She said that today's vote will be a case of lawmakers reflecting the political realities of their districts.

"There were districts in Seattle, and here I think in Olympia, that rejected 747 and legislators that feel strongly that the best way to represent their constituents is to vote no on the bill. And then there will be others that feel like, and I think Sen. Kauffman expressed this quite well recently, her district wants it and she's happy to be here to be able to speak for them in that regard."

UPDATE FROM THE HOUSE CHAMBERS: Not all lawmakers will look to see how their constituents voted on I-747.

In the House wings, outside the closed doors of the Democratic Caucus Room, Rep. Geoff Simpson didn't need to hear any more of the discussion among his colleagues. He said he'll vote no on reinstating I-747.

"It may cost me my job," he said. Simpson, a Kent fire fighter and a former Covington City Councilman, said he's sure that voters in his southeast King County district supported 747. But he thinks 747 is bad public policy.

"I voted against 747 at the polls and I'll vote against it here. Hopefully I'll be judged on the body of my work and not a principled stand on a tax measure that prevents us from solving murders, fighting fires and saving lives."

Simpson had hoped to offer an amendment to the tax cap bill today. He wanted to index the tax limit so it could rise with inflation. But he said that a House attorney told him that the amendment would be ruled out of order as being outside the scope of the bill's title. The bill, House Bill 2416 was written with a title designed to keep it identical to what voters approved. It is called, "An Act Relating to reinstating the one percentproperty tax limit factor adopted by the voters under Initiative Measure No. 747 ..."

A little over 11:30 a.m., the House is getting read to debate the bill.

In recent years Tim Eyman has shown up in Olympia as Darth Vader, a gorilla and a prisoner. This morning he showed up pretty much as a politician. He loves costumes, but he didn't dress the part today. He was dressed in Mukilteo casual: khaki cargo pants, hiking boots and a pullover atop a T-shirt.

But he ducked questions like a veteran pol, launched a partisan attack and said even though lawmakers were set to do exactly as he had wanted, it's not enough. And maybe that's only fair given that Democratic lawmakers will codify Eyman's initiative while trying to convince all that it has nothing to do with Eyman himself.

Gov. Christine Gregoire called lawmakers in to special session today to pass a law limiting annual increases in property tax collections. They're expected to do that by day's end, and what they'll pass will be exactly what Eyman has long said state voters and deserve: a 1 percent statewide cap on property tax increases.

The action is needed because the state Supreme Court threw out Eyman's voter-approved Initiative 747, which imposed the limit in 2001.

But for Eyman, it's no longer enough to watch Democrats who once railed against him and his anti-tax ways embrace his policies. Eyman appeared outside the Senate chambers this morning to say what Democrats will pass is a sham because it doesn't deal with so-called "banked capacity." You can see a good explanation of banked capacity in this Q&A in this morning's paper.

"Gregoire and the Democrats don't care about taxpayers," Eyman declared. The bill they're expected to pass, he said, "Is 1 percent in name only."

But he was asked, by me and others, why, if it is so important to restrict use of banked tax capacity, didn't he deal with it in his own initiative? And if the bill does everything his very own I-747 did, did he pull a fast one on voters, too? No answer to that.

The Legislature today is set to do exactly what Eyman wanted voters to do, the same thing he argued that the Supreme Court should do. But instead of declaring victory — and rightfully watching Democrats eat some tax-flavored crow — Eyman says the Legislature is trying to fool the public.

Not all lawmakers are happy about being here to impose an Eyman initiative on the people. As Eyman talked to the press outside the Senate chambers, Sen. Adam Kline, D-Seattle, stood nearby with a thick pile of papers in his hand. As Eyman finished his press conference, Kline confronted him.

CNN started the debate among Republican presidential candidates with this, from Arlington, Snohomish County, resident Chris Nandor:

I loved watching the candidates react when Nandor sang about them. Mike Huckabee looked like he actually thought it was funny. Romney, not so much.

Nandor is well-known on Sound Politics, where he comments as "Pudge" and he gives readers there an insider's view of the debate.